Question

The only asset Bill purchased during 2017 was a new seven-year class asset. The asset, which was listed property, was acquired on June 17 at a cost of $50,000. The asset was used 40% for business, 30% for the production of income, and the rest of the time for personal use. Bill always elects to expense the maximum amount under § 179 whenever it is applicable. The net income from the business before the § 179 deduction is $100,000. Determine Bill's maximum deduction with respect to the property for 2017.

a. $1,428
b. $2,499
c. $26,749
d. $33,375
e. None of the above

Answer 1

correct option is b. $2,499

Step-by-step explanation:

given data

acquired cost = $50,000

production of income = 30%

deduction = $100,000

to find out

maximum deduction with respect to the property for 2017

solution

we know that here listed property does not pass the predominantly business usage test so here we not take 179 expending or additional 1st year depreciation

so only straight line cost recovery is used

so Maximum deduction will be here as

Maximum deduction = (50,000 × 0.0714 × 70%)

so maximum deduction = 2,499

so correct option is b. $2,499